Performance Management & Feedback

Farmington Connecticut -Otis Elevator is the worlds largest

manufacturer-installer and servicer of elevators-escalatorsmoving walkways etc
Otis products offered in more than 200 countries worldwide
Employs-63000 people
Important installations
Human transport system- Eiffel Tower-Sydney opera house
Vatican etc
For years ineffective performance management system
existed-excessive time consuminglittle confidence
Revamped PMS
Moved towards system provides feedback based on critical
strategic competencies related to compys new focus on
project team

Performance Management & Feedback

Organizations need broader performance measures to
insure
Performance deficiencies addressed in timely manner
through employee development programs
Employee behaviors channeled in appropriate direction
toward performance of specific objectives
Employees provided with appropriate and specific
feedback to assist with career development

Performance Management & Feedback

An effective performance management process can be
conceptualized as one that connects three time periods
Performance management timeline

Past
Data related
to past performance

Present
Allows work
plans-goals and
development
opportunities to
be set

Future
Resulting in the achievement
of strategic objectives

Performance Management & Feedback

Objectives of performance management
Classified as: Strategic-comprises the role of managing strategy
implementation and challenging assumptions

Communication-Comprises the role of checking positioncomplying with non negotiable parameters-communicating

direction-providing feedback and benchmarking
Motivational-Comprises the role of evaluating and
rewarding behaviour and encouraging improvement and
learning

Strategic Choices in Performance Management

Source Jeffrey Mello

Use of the system

1. Facilitate development
2. Second is to determine appropriate rewards and
compensation
3. Third purpose enhance motivation
4. Fourth to facilitate legal compliance
5. Facilitate the human resource planning process

Reciprocal Relationship Between T&D and

Performance Management

Source Jeffrey Mello

Elements of Effective Performance

Management
Clarity and
culture

Process

Motivation
Effective
performance
management
Learning
organisation

People
management
capability

Measurement
and reward

Role of HR
professionals

Performance management seeks to balance business alignment

with learning -development and performance reward

Challenges to Performance Management

1. Linking reward system to performance management
2. Measuring organizational and employee results
3. Using competencies in a performance management
system
4. Using performance management tools to improve
organizational effectiveness
5. Supporting organizational culture with performance
management
6. Developing and implementing performance
management
7. Aligning employees with organizational objectives
and strategy

Top 10 HR challenges for Indian Corporate

1.
2.
3.
4.
5.

Decreasing number of committed employees

Finding and retaining the right people
Competitive compensation and benefits
Knowledge transfer from senior to newer employees
Problems in aligning HR strategies with business
strategies
6. Aligning educational curriculum to meet industry
needs
7. Managing HR cost and accounting
8. Recruiting for critical positions
9. Managing retirement problems
10. Developing an HR infrastructure

Who Evaluates?
Problems with immediate supervisors conducting
performance evaluations
Lacking appropriate information to provide informed
feedback on employee performance
Insufficient observation of employees day-to-day
work to validly assess performance
Lack of knowledge about technical dimensions of
subordinates work
Lack of training or appreciation for evaluation
process
Perceptual errors by supervisors that create bias or
lack of subjectivity in evaluations

Perceptual Errors of Raters

Halo effect
Rater allows single trait, outcome or consideration
to influence other measures of performance
Stereotyping
Rater makes performance judgments based on
employees personal characteristics, rather than
employees actual performance
Recency error
Recent events and behaviors of employee bias
raters evaluation of employees overall
performance

Perceptual Errors of Raters (cont.)

Central tendency error

Evaluator avoids higher and lower ends of rating

scale in favor of placing all employees at or near
middle of scales
Leniency or strictness errors
Evaluators tendency to rate all employees above
(leniency) or below (strictness) actual performance
level

Personal biases and organizational politics

Have significant impact on ratings employees
receive from supervisors

Purposes of Performance Management

Systems
Facilitate employee development
Determine specific training and development needs
Assess individual and team strengths and weaknesses
Determine appropriate rewards and compensation
Salary, promotion, retention, and bonus decisions
Employees must understand and accept performance
feedback system
Enhance employee motivation

Employee acknowledgment and praise reinforces

desirable behaviors and outcomes

Purposes of Performance Management

Systems (cont.)
Facilitate legal compliance
Documentation is strong defense against charges of
unlawful bias
cf., Werner & Bolino (1997)
Facilitate HR planning process

Alert organization to deficiencies in overall level and

focus of employee skills

Other Performance Feedback Systems

Peers
Only effective when political considerations and
consequences are minimized, and employees
have sense of trust
Subordinates
Insights into interpersonal and managerial styles
Excellent measures of individual leadership
capabilities
Same political problems as peer evaluations
Customers
Feedback most free from bias

Other Performance Feedback Systems

Self-evaluations
Allow employees to participate in critical employment
decisions
More holistic assessment of performance
Multi-rater systems or 360-degree feedback systems
Can be very time-consuming
More performance data collected, greater overall
facilitation of assessment and development of employee
Costly to collect and process
Consistent view of effective performance relative to
strategy

What to Evaluate?
Trait measures
Assessment of how employee fits with
organizations culture, not what she actually does
Behavior-based measures
Focus on what employee does correctly, and what
employee should do differently

What to Evaluate? (cont.)

Results-based measures
Focus on accomplishments or outcomes that can be
measured objectively
Problems occur when results measures are difficult to
obtain, outside employee control, or ignore means by
which results were obtained
Limitations

Difficult to obtain results for certain job responsibilities

Results sometimes beyond employees control
Ignores means or processes
Fails to tap some critical performance areas

Job Performance Competencies

Closely tied to organizations strategic objectives

Can take tremendous amount of time to establish
Must be communicated clearly to employees
Must be tied in with organizations reward structure

Multilevel Corporate Competency Model

Source Jeffry Mello

Capital One Success Factors and

Competencies
Builds relationships

Communicates clearly and

openly
Treats others with respect
Collaborates with others

Applies integrative thinking

Analyzes information
Generates and pursues ideas
Develops and shapes strategies
Identifies and solves problems
Applies integrated decision
making

Drives toward results

Focuses on strategic priorities
Organizes & manages multiple
tasks
Directs and coordinates work
Gets job done

Leads in learning environment

Recruits talent
Motivates and develops
Builds and leads teams
Influences others
Promotes culture
Takes personal ownership
Takes responsibility
Learns continuously
Embraces change
Initiates opportunities for
improvement
Shows integrity
Maintains perspective

How to Evaluate?
Absolute measurement
Measured strictly by absolute performance
requirements or standards of jobs
Relative assessment
Measured against other employees, and ranked
on distance from next higher to next lower
performing employee
Ranking allows for comparison of employees, but
does not shed light on distribution of performance

Forced Ranking/Distribution
Arguments in favor of forced ranking
Best way to identify highest-performing employees
Data-driven bases for compensation decisions
Forces managers to make and justify tough decisions
Arguments critical of forced ranking
Can be arbitrary, unfair, and expose organization to
lawsuits
Inherent subjectivity
Forced rankings tend to be more effective in organizations
with high-pressure, results-driven culture

Measures of Evaluation

Graphic rating scales

Weighted checklists
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Critical incident method
Management by objectives (MBO)

Graphic Rating Scales

Source Jeffry Mello

Weighted Checklist

Source Jeffry Mello

Behaviorally Anchored Rating Scale (BARS)

128
Source Jeffry Mello

Behavioral Observation Scale (BOS)

Source Jeffry Mello

Objectives-Based Performance Measurement

Enhanced employee motivation
Employees can be far more committed to reaching
performance objectives (goals) that they have
agreed to

When employee participates, his/her trust and

dependability placed on line

Objectives-Based Performance Measurement

Three common oversights
Setting vague objectives
Setting unrealistically difficult objectives
Not clarifying how performance will be measured
Objectives selected must be valid

Other Considerations
Ensure link between performance management, training &
development, and compensation
Assignments and responsibilities
Traditional performance evaluation may need redesign due
to changes in contemporary organizations
Degree of standardization or flexibility of performance
management system
Standardization important to prevent job bias
Flexibility important for differing levels of responsibility
and accountability

Reasons Managers Resist or Ignore

Performance Management
Process is too complicated
No impact on job performance
Possible legal challenges
Lack of control over process
No connection with rewards
Complexity and length of forms

Strategies for Improving Performance

Management System
Involve managers in design of system
Hold managers accountable for performance and
development of subordinates
Set clear expectations for performance
Set specific objectives for system
Tie performance measures to rewards
Gain commitment from senior managers

Has 360 Degree Feedback Gone Amok?

Purposes of 360 Degree feedback systems

Furthering management and leadership
development
Facilitating organizational change and
improvement initiatives that allow organization to
become more open and participative
Expand formal appraisal system by making
feedback evaluative and linking more with
formal performance appraisal

Reading 10.1

Has 360 Degree Feedback Gone Amok?

Recommendations for increasing likelihood that 360
feedback will benefit organization
Assign internal consultant or champion to oversee
process, and hold him/her accountable for results
Initial implementation should be on limited basis to allow
for evaluation of process using pre-post test control
group test design
Create focus group to identify effectiveness criteria that
organization values and that will be used in the
measurement process
Train all raters to avoid systematic rater errors

The Reward system

Business Strategy
HR Strategy
Reward Strategy
Performance
management process

Financial reward
process
Base
pay

Employee
benefits

Job
evaluation
Pay
structure

Variable
pay

Non financial
Reward process
Recognition, responsibility
achievement, development
growth

Pay
surveys
Total
remuneration
Reward
system

Improved individual
/team performance
Improved organizational
effectiveness